Contingent Liabilities Arising from Public Guarantee Schemes to Mitigate COVID-19 Pandemic: The Case of Spain

23 Pages Posted: 21 Dec 2021 Last revised: 27 Dec 2021

See all articles by Carlos Contreras

Carlos Contreras

Universidad Complutense de Madrid (UCM

Julio Angulo

Independent

Date Written: December 20, 2021

Abstract

Governments around the world have provided credit guarantees to ensure that companies with liquidity problems during the COVID-19 pandemic could find bank financing. In Spain, as of 30 September 2021, Liquidity Guarantee Lines managed by the public financial agency ICO had provided guarantees of around €100 billion. Public guarantee schemes (PGSs) have no immediate impact on fiscal balances, but they generate contingent debt. In this paper we propose a model to estimate the expected value of the increase in public debt resulting from. According to our estimates, PGSs would contribute to an increase in the debt-to-GDP ratio in Spain of between 0.96 and 1.01 percentage points in 2023.

Keywords: Public guarantee schemes, contigent liabilitiy, public debt

JEL Classification: H32, H63

Suggested Citation

Contreras, Carlos and Angulo, Julio, Contingent Liabilities Arising from Public Guarantee Schemes to Mitigate COVID-19 Pandemic: The Case of Spain (December 20, 2021). Available at SSRN: https://ssrn.com/abstract=3989608 or http://dx.doi.org/10.2139/ssrn.3989608

Carlos Contreras (Contact Author)

Universidad Complutense de Madrid (UCM ( email )

Campus de Somosaguas
Pozuelo
Madrid, Madrid 28223
Spain

Julio Angulo

Independent ( email )

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